Book Notes

By Sarah Lyall An Icelandic Tale Back home in Iceland, Olafur Olafsson is a star. He achieved the highest mark in Icelandic history on a standardized test for high school graduates. His most recent novel, "Absolution," sold 14,000 copies in Iceland, making it the best-selling hard cover book of all time there. (As his publisher, Olafur Ragnarsson of Vika-Helgafell, likes to point out, in a country of 250,000 people, 14,000 copies is the equivalent of 14 million copies in the United States, more even than "The Bridges of Madison County" sold here.) But Mr. Olafsson, who is just 31, is an expatriate author, one of a number in New York City who are far more successful in their native countries than they are here. What he's known for here is his daytime job, as the precocious president of Sony Electronic Publishing. Only because Mr. Olafsson happened to mention "Absolution" at a meeting about an electronic project with Jason Epstein, the editorial director at Random House's adult trade division, did the book find an American publisher.

Published: March 30, 1994

The mention made Mr. Epstein cringe, he recalled last week: Here was another aspiring writer with some egregious novel. But when he read the beginnings of the novel in translation, he said, he found it riveting. "Absolution" has just been published by Pantheon, a division of Random House, with a first printing of 10,000, a respectable number for a literary novel from abroad. The book is about an embittered Icelandic expatriate who has been harboring a guilty secret for decades. It hasn't been widely reviewed, but The New York Times Book Review said it was "unexpectedly enjoyable," and Entertainment Weekly gave it an A.

Mr. Olafsson, in a telephone interview on Monday, sounded disconcertingly normal, not like the humorless overachiever you might expect. He made it clear that the mean-spirited protagonist of "Absolution" was not an autobiographical creation. "He can be a very unpleasant human being and my goal was to make him so untrustworthy that you couldn't believe anything he said," Mr. Olafsson said. "But I also wanted to make him complex enough that you would sympathize with him, despite his shortcomings."

Mr. Olafsson has also finished a play called "Four of Hearts," which he said was about "four old guys playing bridge" and which is to be produced in Iceland soon. He plans to finish a short novel by the fall. And then he intends to embark on his next long novel, set in the years after World War II. It's no wonder his wife likes to joke that his favorite Friday night consists of a good meal, a bottle of wine and the chance to fall asleep 10 minutes into a rented movie.

Mr. Olafsson said he wasn't sure if he liked his first two books -- a short-story collection and a novel, both extraordinarily successful in Iceland -- well enough to want to publish them in the United States. But if he does, he could translate them himself. He speaks six languages. Quite unnecessarily, he said, "I have a very difficult time sitting around doing nothing." Not the Usual Way to Deal

Although William H. Gates is much, much richer than every publisher in New York (and indeed, than almost everybody in the world), he shares an important trait with publishing executives: he's used to doing things his way. And so as Mr. Gates, the chairman of Microsoft Corporation, tries to strike a book deal, the negotiations have turned into a fascinating clash of cultures from opposite ends of the information-disseminating industry.

Mr. Gates's book is to be about the future of the information revolution. It's a book that most of the major houses in New York who can afford to pay multi-million-dollar advances are keenly interested in, particularly because they themselves want to know what that future is. As one executive put it, "I would kill for that book."

It's unlikely to come to that, but Mr. Gates certainly isn't following the normal book-auction blueprint. He hasn't met any publishers himself. He has no literary agent, and so the negotiations are being conducted by a team from Microsoft, including Jonathan Lazarus, the friendly but hard-bargaining vice president for strategic relations, who is in New York with two colleagues this week. And many of Mr. Gates's terms, outlined in a recent letter to publishers, are unusual even in an industry accustomed to dealing with high-rolling nonwriters like Margaret Thatcher, H. Norman Schwartzkopf and Oprah Winfrey.

Among other things, Microsoft said, it wants an advance of $2.5 million, a guaranteed first printing of 500,000 copies and the option to hold on to trade paperback rights and world rights in non-English-speaking countries. Microsoft also wants the publisher to set aside $125,000 for marketing.

Some publishers think that all this is fine, that Mr. Gates is such a potential gold mine that whatever he wants, he should get. "I'm not put off at all," one executive said. But others -- even ones who said they wanted to publish Mr. Gates -- said they were being made to feel as though they were pawns, not publishers. "You pay a huge advance," said another executive, "and you're going to try to make it as successful as possible, obviously."

Unsettling in a different way is Mr. Gates's intention to donate all his proceeds to charity. Publishers aren't used to that kind of attitude, which means, among other things, that none can win the deal by simply out-bidding everyone else.

"Our goal is not money and we're not focusing on the advance," Mr. Lazarus said in a interview. "Both Bill and I think that's kind of a crazy way to do things, when you get some crazy advance. We're looking for who we think will do the best job for the book and sell the most books."

A number of companies, including Random House, Simon & Schuster, Bantam Doubleday Dell and Warner Books, have been in touch with Microsoft, with varying results. At Little, Brown, Fredrica Friedman, the executive editor, said her company had decided to pass, largely because Mr. Gates's current position might make it hard for him to be candid about his business. "For that price," she said, "you have to sell a lot of books."

It's impossible to calculate how many books a publisher would have to sell to make back the advance, but few best sellers sell anywhere near 500,000 copies.

Ms. Friedman also pointed out that Hyperion had just signed up a book by Mitch Kapor, the founder of the Lotus Development Corporation, that might compete with Mr. Gates's.

Microsoft officials unused to publishing personalities, and probably a bit bemused by how quickly gossip about confidential deals rushes around town here, said they were likely to select a publisher by the end of the week. "This process is absolutely fascinating," Mr. Lazarus said. New Digest Subsidiary

The Reader's Digest Association announced yesterday that it would combine several disparate departments and imprints into a new, wholly owned subsidiary to be called Reader's Digest Young Families, which would create and market children's books and entertainment products. The idea behind the change, said Tara M. Phethean, a spokeswoman for Reader's Digest, would be to expand the business around the world by giving the new division its own direct-mail marketing staff, the most effective sales tool the company uses. The company also sells the books in bookstores.

Young Families takes in a number of young adults' imprints, including Reader's Digest Kids; Joshua Morris; Wilton House, and Wishing Well. In the fall of 1994, Ms. Phethean said, the group plans to publish about 40 book titles altogether. Endnotes

*The Penguin Group, which includes Penguin UK and Penguin USA, released 1993 year-end figures yesterday showing that sales and operating profits -- good indicators of the strength of business -- increased by 10 percent and 23 percent, respectively, over 1992 levels. In the United States, though, hard-cover sales fell in 1993 from the previous year, the company said, while sales of adult trade paperbacks increased by more than 20 percent.

*Tillie Olsen, who was 50 in 1962 when she published her first book, a collection of short stories called "Tell Me a Riddle," has been awarded this year's 1994 Rea Award for the Short Story. The award, which carries a $25,000 prize, is presented each year to honor a living American author who has "made a significant contribution to the short story as an art form." In their citation, the three judges -- Charles Baxter, Susan Cheever and Mary Gordon -- said that Ms. Olsen's stories had "the lyric intensity of an Emily Dickinson poem and the scope of a Balzac novel."